Bitcoin Loses Steam As China Clamps Down On Crypto-Currencies

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The announcement followed almost a week of uncertainty about the future of bitcoin exchanges in China. Although that same exchange also encouraged customers to withdraw their funds "as quickly as possible". Some reports estimate that China's share of total worldwide hash rate (closely linked with bitcoin production via mining) is at 71% or higher.

Despite its halt to local trading, Shanghai-based BTCC, the world's oldest bitcoin exchange, said its other businesses, including an global exchange and a bitcoin mining pool, remain unaffected.

He said there should be a distinction between digital currencies and digital tokens, such as Bitcoin.

"They can become a tool for illegal fund flows and investment deals". Digital currencies developed by authorities could be used for good, with the right regulation, he said.

Remember also, this time around there hasn't been any formal guidance from government - and it appears local exchanges Huobi and OKCoin will continue letting users trade between cryptocurrencies.

As Bitcoin and other crypto-currencies can be bought and sold without any government intervention, China's move is being seen as a way for Beijing to gain control over crypto-currencies. At best, companies that accept Bitcoin must do so that they convert them immediately into more stable currencies, or run the risk of losing out in substantial measure.

An issue of secondary concern to bitcoin enthusiasts may be about whether other nations will follow China's lead.

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Some of the major Chinese cryptocurrency exchanges, like BTCC, viaBTC, BitKan, have already announced their closure.

A sign in Hong Kong reads "bitcoin accepted here".

Chinese president Xi Jinping is standing for re-election at the party Congress and could be positioning himself with the party base by cracking down on what might be perceived as the wilder areas of the free market.

Thursday night, however, there were some signs that Chinese regulators could have a change of heart.

The cryptocurrency dropped 9.3 per cent to US$3,077.55 yesterday morning in London, extending this week's decline to 28 per cent.

Despite the sudden doom-and-gloom attitude towards Bitcoin, the current crash is likely just a blip in long term outlook for the currency.

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